Sunday, September 23, 2012

Has Islamic banking stalled in Indonesia?

Islamic finance has developed from different roots in different places, but it has more or less been converging towards a global industry, albeit slowly.  It is relatively uncommon to hear spoken things like "We will not be going to the Middle East for money because they have no faith in us" and "If they want to come to us, they are welcome, but we will not wait for them."

But in an article posted on CPI Financial, that is what Dr. A. Rizwan Amin says regarding Islamic finance in Indonesia.    He proposes a rather simple idea for what ails Islamic finance in Indonesia: "One single gesture from the central bank, to offer Islamic banking alongside conventional banking, would solve a big problem.".

This is an area where regulations matter and where there has been some movement away from the offering of Islamic finance services by conventional banks.  Within Indonesia, there are conventional banks with Islamic windows, but I do not know if there are opportunities for these Islamic windows to be co-located within conventional branches (where the deposits are kept separate from those from conventional banking).  

The move to disallow conventional banks from having Islamic windows has been debated with the move by the central bank in Qatar to separate the two sectors entirely.  So, I ask the readers of this blog, "What do you think about the separation of Islamic and conventional banks?  Should there be Islamic windows at conventional banks?  Should they be able to operate out of the same branches?"  If you have any insights about these questions, or about the issues posed by Dr. Amin, please email me at   I am interested to hear your feedback.

1 comment:

natasha khan said...

I like your post..
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